MICHAEL LEMLY, Employee,
Plaintiff,
v
.
COLVARD OIL COMPANY,
Employer,
and
FEDERATED MUTUAL INSURANCE COMPANY,
Carrier, Defendants.
Crosswhite, Edwards & Crosswhite, by Joseph N. Crosswhite, for
plaintiff-appellee.
Ball Barden & Bell, P.A., by Thomas R. Bell, for defendant-
appellants.
EAGLES, Chief Judge.
Colvard Oil Company and Federated Mutual Insurance Company
(“defendants”) appeal from an opinion and award of the full
Commission concluding that a memorandum of settlement arising out
of a mediated settlement conference was not enforceable as a
compromise settlement agreement and awarding Michael Lemly
(“plaintiff”) total disability benefits. After careful
consideration of the briefs and record, we reverse and remand.
The plaintiff worked for defendant Colvard Oil Company
(“Colvard Oil”) as a truck driver. On 6 May 1997, the plaintiff
was hauling gravel when tree limbs became entangled in the bed ofhis truck. The plaintiff “wrestle[d]” with a tarp covering the bed
of his truck. As the plaintiff lifted a tree limb from the bed of
the truck, he “felt a real sharp pain” in his back and “a real bad
burning sensation.” The following day, the plaintiff went to the
emergency room and then to his family physician.
Defendants filed a Form 60 dated 5 June 1997 admitting
plaintiff's right to compensation and began paying plaintiff
temporary total disability benefits. Plaintiff participated in
physical therapy and received treatment from several doctors until
he was cleared to return to light duty work in January 1998.
Plaintiff returned to work for Colvard Oil on 26 January 1998 at a
filling station subject to work restrictions. After work on 26
January, the plaintiff “could barely walk” and he proceeded to the
emergency room. Dr. Mark Scott, a physician in the emergency room,
advised the plaintiff to remain out of work. Dr. Charles Branch,
Jr., a neurosurgeon, performed surgery on the plaintiff's back in
May 1998. Plaintiff has not returned to work since 26 January
1998.
The Industrial Commission ordered the parties to participate
in a mediated settlement conference which occurred on 12 August
1998. At the conclusion of the conference, the parties all signed
a “Memorandum of Settlement” which stated:
The Parties agree that:
1. Defendants shall pay claimant $40,000.00
in settlement of this claim; and
2. Claimant shall pay out of the settlement
proceeds all unpaid medical bills and
satisfy all medical liens; and
3. Claimant shall execute clincher setting
out above terms and other standard
language. Upon approval by [the
Industrial Commission], settlement will
be paid.
4. Defendants shall pay all mediation fees.
The day after the mediation, the defendants sent the plaintiff
a clincher agreement. The plaintiff did not execute the clincher
agreement and filed a Form 33 dated 15 September 1998 seeking a
hearing because of “the Defendants refus[al] to provide necessary
medical treatment.” Defendants filed a Form 24 on 12 October 1998
seeking to terminate or suspend payment of benefits and moved to
“Require Compliance with Mediated Settlement.”
In an opinion and award, the Deputy Commissioner denied
defendants' motion to enforce the settlement agreement. The Deputy
Commissioner awarded plaintiff temporary total disability
compensation from 28 January 1998 through 26 May 1999 and permanent
partial disability compensation for a period of seventy-five weeks.
The plaintiff and defendants appealed.
The full Commission concluded that the signed settlement
agreement was “not enforceable as a Compromise Settlement
Agreement.” The full Commission awarded the plaintiff temporary
total disability benefits from 28 January 1998 through 26 May 1999
and ongoing total disability benefits “until further order of the
Commission.” Defendants appeal.
On appeal, defendants contend that the full Commission erred
in refusing to allow defendants to stop paying disability benefits
to the plaintiff because plaintiff wrongfully refused light dutywork and that the full Commission erred in failing to enforce the
settlement agreement. After careful consideration, we agree.
Defendants first contend that the full Commission erred by
failing to enforce the settlement agreement. Defendants argue that
the parties participated in a Commission ordered mediation which
resulted in an agreement to settle, signed by both parties. The
plaintiff agreed to execute a clincher agreement which would set
out the terms of the settlement. Defendants argue that the
plaintiff has not alleged that the clincher agreement contained
terms different than what was agreed to at the mediation. We
agree.
“[O]ur role in reviewing decisions of the Commission is
strictly limited to the two-fold inquiry of (1) whether there is
competent evidence to support the Commission's findings of fact;
and (2) whether these findings of fact justify the Commission's
conclusions of law.” Foster v. Carolina Marble & Tile Co., 132
N.C. App. 505, 507, 513 S.E.2d 75, 77, disc. review denied, 350
N.C. 830, 537 S.E.2d 822 (1999). “The Commission's findings will
not be disturbed on appeal if they are supported by competent
evidence even if there is contrary evidence in the record.
However, the Commission's conclusions of law are reviewable de novo
by this Court.” Hawley v. Wayne Dale Constr., 146 N.C. App. 423,
427, 552 S.E.2d 269, 272, disc. review denied, 355 N.C. 211, 558
S.E.2d 868 (2001) (citations omitted).
Here, the full Commission found that:
The parties participated in a mediated
settlement conference pursuant to an Order ofthe Commission dated 25 March 1998. On 12
August 1998, the mediation was held and an
agreement was reached between the parties.
The parties signed a handwritten memorandum of
the settlement, pending the execution by
plaintiff of a clincher agreement. While
returning home from the conference, plaintiff
determined that he did not wish to follow
through with the agreement, and did not
prepare a clincher agreement.
(Emphasis added.) The full Commission then concluded that “[t]he
handwritten Memorandum of Settlement signed by the parties on 12
August 1998 is not enforceable as a Compromise Settlement Agreement
under Industrial Commission Rule 502.”
Pursuant to G.S. § 97-80(c), “[t]he Commission may order
parties to participate in mediation.” The duties of the parties
if an agreement is reached in the mediation are:
(d) Finalizing agreement. If an agreement is
reached in the mediation conference, the
parties shall reduce the agreement to writing,
specifying all the terms of their agreement
bearing on the resolution of the dispute
before the Industrial Commission, and sign it
along with their counsel. By stipulation of
the parties and at their expense, the
agreement may be electronically or
stenographically recorded. All agreements for
payment of compensation shall be submitted in
proper form for Industrial Commission
approval, and shall be filed with the
Commission within 20 days of the conclusion of
the mediation conference.
Mediated Settlement and Neutral Evaluation Conferences R. of N.C.
Indus. Comm'n 4(d), 2003 Ann. R. (N.C.) 866. “All compromise
settlement agreements must be submitted to the Industrial
Commission for approval. Only those agreements deemed fair and
just and in the best interest of all parties will be approved.”
Workers' Comp. R. of N.C. Indus. Comm'n 502(1), 2003 Ann. R. (N.C.)834. “A 'clincher' or compromise agreement is a form of voluntary
settlement used in contested or disputed cases.” Ledford v.
Asheville Housing Authority, 125 N.C. App. 597, 599, 482 S.E.2d
544, 546, disc. review denied, 346 N.C. 280, 487 S.E.2d 550 (1997).
The settlement agreement “must contain specified language or its
equivalent” to be approved by the Industrial Commission. Id.; see
also Workers' Comp. R. of N.C. Indus. Comm'n 502(2), 2003 Ann. R.
(N.C.) 834.
Compromise settlement agreements, including mediated
settlement agreements, “are governed by general principles of
contract law.” Chappell v. Roth, 353 N.C. 690, 692, 548 S.E.2d
499, 500, reh'g denied, 354 N.C. 75, 553 S.E.2d 36 (2001). “It is
a well-settled principle of contract law that a valid contract
exists only where there has been a meeting of the minds as to all
essential terms of the agreement.” Northington v. Michelotti, 121
N.C. App. 180, 184, 464 S.E.2d 711, 714 (1995). “To be
enforceable, the terms of a contract must be sufficiently definite
and certain.” Miller v. Rose, 138 N.C. App. 582, 587-88, 532
S.E.2d 228, 232 (2000).
Here, at the mediation the parties signed a written
“Memorandum of Settlement.” Plaintiff, plaintiff's attorney,
defendants' attorney, and a representative of defendant Federated
Mutual Insurance Company all signed this memorandum. The
memorandum began with the language “[t]he parties agree that: (1)
Defendants shall pay claimant $40,000.00 in settlement of this
claim.” It further stated that the “[c]laimant shall pay out ofthe settlement proceeds all unpaid medical bills and satisfy all
medical liens” and that “[d]efendants shall pay all mediation
fees.” The memorandum also stated that “[c]laimant shall execute
clincher setting out above terms and other standard language. Upon
approval by [the Industrial Commission], settlement will be paid.”
The language of this signed memorandum indicates that the
parties agreed to settle this matter for $40,000.00 and provides
for the payment of plaintiff's unpaid medical bills and medical
liens. It references a clincher agreement that “[plaintiff] shall
execute.” The defendants, in accordance with the signed
“Memorandum of Settlement,” prepared a clincher agreement and sent
it to the plaintiff the day after the mediation. This clincher
agreement contained the standard terms required by Rule 502(2) of
the Workers' Compensation Rules of the North Carolina Industrial
Commission.
In addition, the “Report of Mediator” states that the “parties
reached: X agreement on all issues.” It further states that the
“[i]ssues settled to be disposed of by: X clincher.” Defendants'
“Motion to Require Compliance with Mediated Settlement” provides
that:
4. On 12 August 1998 mediation occurred
which resulted in a mediated settlement
agreement. . . .
5. On 12 August 1998, as a result of
mediation, the parties settled all issues
between them. A written memorandum of
this agreement prepared at mediation is
attached . . . to this Motion.
6. As a result of this settlement agreement,
the undersigned attorney for Employer andCarrier prepared a Clincher Agreement and
mailed it to Employee's attorney. In
early September telephone conversations
occurred between attorneys for the
parties indicating that Employee would
not go through with the settlement. On
15 September 1998 Employee's attorney
wrote attorney for Employer and Carrier a
letter . . . indicating that his client
would not go through with settling this
claim and that he was, in fact, filing an
additional Form 33.
“Plaintiff's Response” to this motion stated that “[p]laintiff does
not dispute the facts as set forth in the Defendant's Motion.”
While the better practice would be for the parties to execute
a clincher agreement which contains all the required terms and
language at the conclusion of the mediated settlement conference if
an agreement is reached, the signed “Memorandum of Settlement”
here fully complies with Rule 502(2) of the Workers' Compensation
Rules and is a valid compromise settlement agreement subject to
approval by the Industrial Commission pursuant to Rule 502(1).
Because we have concluded that the written “Memorandum of
Settlement” is a valid compromise settlement agreement, we need not
address defendants' remaining assignments of error.
Accordingly, the opinion and award of the full Commission is
reversed and the matter remanded to the full Commission in order
for the full Commission to consider its approval of the mediated
settlement agreement pursuant to Rule 502(1) of the Workers'
Compensation Rules, i.e., is the agreement “deemed fair and just
and in the best interest of all parties.”
Reversed and remanded.
Judges MARTIN and GEER concur.
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